Update

UK Regulatory Reform

	Money Laundering Verification Checks

The FOA has continued its efforts to address the problems surrounding the basis on which the executing broker may delegate the task (but not the responsibility) of verifying identity to the clearing broker when part of a tri-partite give-up agreement.

Since the last Update, the FOA, together with market practitioners and representatives from the Joint Exchange Committee, met HM Treasury and the FSA in order to seek clarification on where the regulatory benefit lies in requiring the executing broker to perform additional due diligence. The FOA explained why the FSA's stance was considered unreasonable by its membership and emphasised its belief that it was also contrary to the principles of good regulation, making reference to its letter to FATF.

At the end of the meeting, HM Treasury and FSA agreed to review the legal position and FSA affirmed that it was willing to discuss the issue further to find an acceptable solution. The FOA, for its part, agreed to provide further information to HMT and FSA on give-up arrangements.

	Compliance Forum

The Compliance Forum held on 3 September covered the Proceeds of Crime Act, order routing controls and securitised derivatives. In October, there were two compliance forum seminars, the first of which was held on 22 October and focused on Transaction Monitoring and the requirements and expectations of exchanges. The second seminar was held on 24 October and covered "Challenging the FSA: what are the rights of regulated firms/approved persons?". The FOA has provided all its compliance officers with copies of the papers produced by Taylor Wessing at this last workshop which, it believes, will be of interest to compliance officers and in-house lawyers.

The next Compliance Forum is scheduled to take place on Tuesday 19 November. The topics to be covered include FSA's latest consultation paper on Best Execution; an FOA proposal to develop e-learning modules for use by customers when using firms' order routing systems; and an update on E-commerce requirements. The Forum to be held in January will focus almost entirely on the Commission's proposal for a revised Investment Services Directive (which, it is anticipated, will be released in late November/early December).

A high level course for senior managers organised by the FOA led by FSA, Clifford Chance and PWC and chaired by the FOA Chairman, Roy Leighton, will be held over three half day sessions on 14, 21 and 29 January. Full details can be found in the Training section of this "Update". A separate senior management workshop (which will be led by FSA and Denton Wilde Sapte) is being designed for users of the Oil, Power and Gas markets. Details will be circulated shortly.